Value Added (portfolio management)

I’m not sure how they derive: VA* = IR² / 4λ

starting with the formulae for ω* and VA, I get:

ω* = IR / 2λ

VA = ω IR - λω²

= IR (IR / 2λ) - λ(IR / 2λ)²

= IR² / 2λ - IR² / 4λ

I don’t see what’s next…

you r not alone there, i also ddnt understand how they arrived at the final formular after substituting the w* for optimal residual risk in the VA*

I then resorted to js cramming the final formula with understanding the derivation .